Growth Planning - Knitwear

PLANNING FOR
GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Mention key aspects to evaluate opportunities for growth and justify them in context with
concerned company.....................................................................................................................1
P2 Evaluate growth opportunities by applying Ansoff's growth matrix.....................................4
TASK 2............................................................................................................................................5
P3 Define potential source of funding for concerned business and define drawbacks and
benefits for each source...............................................................................................................5
TASK 3............................................................................................................................................6
P4 Formulate an appropriate business plan for growth which include strategic objective and
financial information for scaling up business.............................................................................6
TASK 4 ...........................................................................................................................................8
P5 Define succession or exit option for small business along with their advantages and
disadvantages..............................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Planning for growth is a tactics which benefits a company in planning and tracking
growth margins in their business revenues. This allows a business person in achieving desired
success by satisfying the needs and expectations of customers in a proper way. By appropriate
planning and strategies, a business firm can differentiate its services or products from their
competitors so that high profits can be earned (Barnett, 2017). This report is written in context
with Rowlinson Knitwear which is UK based SME, situated at Stockport, England. Company
offers school-wear and corporate-wear clothes to their customers. This assignment will include
about key considerations that will benefits the company in adopting right growth strategy. In this
context, frameworks like Porter's generic, Ansoff's matrix and Pestle analysis will be performed.
Different sources of fund and a business plan is formulated in context with company. At last,
different plans to succeed and exit business are mentioned in brief.
TASK 1
P1 Mention key aspects to evaluate opportunities for growth and justify them in context with
concerned company
Rowlinson Knitwear is a UK based small scale organisation which is situated in England.
Company was founded in 1935 and offer premium quality corporate-wear and school-wear to
their customers. At present, company is employing less than 60 employees as they are dealing in
corporate and school garments. But now company is planning to expand their business
operations by providing kids clothes. This will benefits the company in gaining attention of more
customers due to which their revenues and sales will be improved in a considerable manner. In
this context, there are different considerations to evaluate appropriate growth opportunities. In
context with Rowlinson Knitwear, these opportunities are mentioned below:
Porter's generic strategy
Porter Generic strategies helps in determining direction related to strategies of Rowlinson
knitwear in order to sustain competitive advantage. Firm's profitability depends primarily upon
industry in which it competes and position within same. There are broadly three such strategies:
Cost leadership, Differentiation and Focus.
Cost leadership: when firm calls out to become low cost producer within industry
through selling at industry price to earn profit or below it to capture market share (Blackburn,
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Hart and Wainwright, 2013). This strategy is suitable for large-scale producers that offer
standard products with less difference accepted by large market share. Firm uses high
productivity, higher utilisation of capacity and effective technology to achieve this. Capital
investment in production is required to achieve cost leadership that will be riskier for Rowlinson
Knitwear as being small scale firm to invest in kids wear section in initial period. This roadblock
can be overcome by hiring expertise of manufacturing process and producing in mass to sell their
kids wear at lower price to attain economies of scale. Firm can also use efficient methods of
distribution for their products to capture market share .
Differentiation Strategy: It can be define as producing products by selecting one or
more criteria to add extra value in feature for consumer that allows firm to charge premium
price. This strategy is applicable in those industry where competition is high and firm can earn
profits only through sustainable competitive advantage.. The objectives behind this strategy is to
make abnormal profits and growth in market share. To apply this strategy, Rowlinson Knitwear
requires innovation, R&D in manufacturing and effective marketing to make customer
understand uniqueness of product. Kids wear section in introductory stage will face competition
imitation and changes in taste and preferences related risk. To avoid associated risk firm's
established corporate reputation for quality, skilled research and development team along with
strong sales force will work as strength for kids wear market as well (Colantoni and et. al.,
2016).
Focus strategy: As name suggest this strategy focuses on choosing narrow segment or
group of segments with limited competitive scope within industry. This includes focusing on cost
or differentiation strategies for narrowed target segment to exploit differences in cost or special
needs of customers. To adapt this strategy Rowlinson Knitwear have to select groups of
segments in kids wear market and focus on serving them with cost advantage, differentiation or
even both simultaneously. It will enjoy customer loyalty, higher profits and development
strengths in relatively narrow market. But imitation and changes in target segment by
competitors are some of associated risk in application of this strategy. Entry barriers in industry,
specialized products with differentiation meeting customer needs are tools of Rowlinson
Knitwear to overcome this risk in kids wear market (Fahlvik Elfving and Wikström, 2014).
For kids wear section, firm will adopt Differentiating Strategy to capture and growth in
market share to build customer loyalty. Uniqueness in product allows firm to charge premium
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price that will help in earning profit and having competitive advantage in industry. To sustain
advantage and quality in product firm will ensure regular research of customer needs and
developments in manufacturing.
PESTLE analysis: This is a strategic framework which will helps a firm in
acknowledging external business environment in a deeply manner. By using this framework, it
will be easy for Rowlinson Knitwear to identify if operating in UK market by introducing new
section of kids garment is profitable or not. This analysis will emphasize on different aspects
such as social factor, political factor, technological and social aspects etc. In context with
Rowlinson Knitwear, PESTLE analysis is mentioned below:
Political factor: These aspects are concerned with the extent to which a government and
their policies can influence a particular company. These factors are concerned with the political
stability of government. In case of UK, government is stable and support SME's due to which it
is beneficial for Rowlinson Knitwear to expand their business in UK market. Tax rates and trade
tariffs in UK are also low which will impact concerned company in positive manner. Increment
in trade tariffs and tax rates can influence Rowlinson Knitwear in negative manner (Gatukui and
Katuse, 2014).
Economic factor: These factors are related with GDP, purchasing power and growth rate
of the nation where company is operating. Economic position of UK is strong where most of the
population is independent and earn disposable income. This denotes that purchasing power of
people is high and they will like to spend on clothes of their kids. Increased inflation and interest
rates, can reduce the purchasing power of people which can impact Rowlinson Knitwear in a
negative manner.
Social factor: These aspects are linked with the opinion, belief, behaviour and attitude of
people living in a geographic region. In case of UK, people are well educated and open minded
due to which they prefer standardised and unique products. In this context, providing premium
quality kids clothes to the customers will help the company to achieve a renowned position
within marketplace. If company fails to offer clothes in accordance with expectations of
customers then this will results in loss of revenues and market shares.
Technological factor: These factors of PESTLE framework are linked with advancement
of technology and innovative aspects. It is essential for business firms like Rowlinson Knitwear
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to update their technology on a timely basis so that manufacturing process can be carried out in
efficiently and timely manner. If company will not update their technology, it can reduce their
productivity due to which dissatisfaction among customers will enhance in a considerable
manner.
Legal factor: This factor is linked with the legal norms, laws, policies and procedures
which are formulated by the government of a nation so that welfare of customers, employees and
organisation can be safeguarded in a proper manner. If manager of company will follow these
laws, customers and employees will be satisfied and introduction of kids segment will be a huge
success. If company is not going to follow these norms, victim individual can file a case due to
which Rowlinson Knitwear will be needed to pay high penalties and fines (Huang and Zhang,
2014).
Environmental factor: This aspect is associated with the environmental laws which are
defined by UK government so that no business activity can impact environment and ecology in a
negative manner. Following these laws will benefits Rowlinson Knitwear in sustaining a positive
brand image in market due to which large number of customers will prefer to buy their new and
existing products.
P2 Evaluate growth opportunities by applying Ansoff's growth matrix
Ansoff's matrix is a strategic management tool which will helps the owner and
management in Rowlinson Knitwear to prepare future strategies so that high revenues and
returns can be attained. There are four growth strategies which are mentioned below:
 Market penetration: Under this strategy, a company perform different activities so that
their market shares can be increased by offering existing products in existing
marketplace. Rowlinson Knitwear can attain benefits from this strategy by reducing cost
of the products which is kid's clothes. Due to this sales will be high and more profits can
be earned.
 Market development: Here, company introduce existing products in new market so that
their customer base can increase. This will helps the company in achieving desired
market shares. This can be accompanied by expanding business in new geographic
locations (Lewis, 2013).
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 Product development: In this strategy, an organisation offers new products to their
existing customers. Due to new product, attention of customers is gained properly. This
results in high revenues and sales due to which desired growth is achieved.
 Differentiation: This is the last and most risky strategy in which new products are
offered to new people. In this strategy, both product and market development is needed.
In this strategy, new customers will be offered new products due to which high sales and
profits are earned. These profits ensure expected growth to company.
In case of Rowlinson Knitwear, company is going to adopt product development as their
growth strategy. In this strategy, company will introduce clothes for kids to their existing
customers. Due to increased product line, sales and market shares of company will be increased.
TASK 2
P3 Define potential source of funding for concerned business and define drawbacks and benefits
for each source
Rowlinson Knitwear is a small scale company which provide clothes for school and
corporate-wear. Company is planning to achieve growth by expanding into kids section. For this,
organisation requires high investment and funds. For this new project, company needs 40,000
pounds but they have 10,000 pounds to invest. Company can arrange remaining amount of
30,000 pounds through internal and external funding sources which are stated below:
Internal source of funds: In case of internal funding sources, company arrange required
money within an organisation. Funds can be arranged by selling assets, disposing inventories and
collecting receivables etc. As company needs high amount of funds, this method is not suitable.
External source of funds: In case of external funding, Rowlinson Knitwear can take
loan from external agencies like banks, investors or other financial institutions. Below are
mentioned different sources from which required funds can be collected (Mason, 2015).
Bank loan: A bank loan is referred to a certain amount of money which is borrowed by
bank for a fixed time and agreed repayment schedule. Repayment amount is going to depend
upon the size and duration of loan. Rowlinson Knitwear can take bank loan to satisfy their needs
of funds.
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 Advantage: In case of interest rate, bank loans are cheapest option rather than overdraft
or credit cards. This will helps the company in saving their revenues which can be
invested in further business expansion.
 Disadvantage: While giving loans, bank needs some collateral and assets. In case,
Rowlinson Knitwear is not able to pay on time, their collateral can be sold to retrieve
loan amount (Moseley, 2013).
Crowdfunding: It is referred to the procedure of online project funding by gathering
small volume of money from large number of individuals. It will be a collective efforts of
customers,stakeholders, investors, friends and family so that Rowlinson Knitwear can fulfil their
needs of 30,000 pounds.
 Advantage: This a fast way through which Rowlinson Knitwear can raise their funds
without any upfront fees. It will be a good way to acknowledge public reaction for
services or products of Rowlinson Knitwear.
 Disadvantage: This is a complex way to raise funds in comparison with traditional ways
of financing. If interest and trust of customers and stakeholders will not gained, this can
hinder the project which will be a big loss for company.
Company can take bank loan where they have to pay fixed amount of interest at regular
time interval after taking the loan of 30,000 pounds. This method is simple and will not
complicate paying back process for concerned company.
TASK 3
P4 Formulate an appropriate business plan for growth which include strategic objective and
financial information for scaling up business
Business plan is defined as a roadmap which offer directions so that a company can plan
its future strategies and achieve desired success without facing much complexities. Rowlinson
Knitwear is going to expand their business by introducing premium quality clothes for kids.
There are various companies which are already offering kids wear in a successful manner.
Hence, it is important for Rowlinson Knitwear to formulate an appropriate business plan so that
finances of company can be maintained and objectives can be achieved desirably. This plan will
benefits the organisation in achieving desired business growth (Wu, 2015).
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Vision: The vision of Rowlinson Knitwear is to became a market leader in offering school-wear,
corporate-wear and kids clothes.
Mission: Main mission of this company is to earn high sales and revenues so that tough
competition can be given to rival companies and desired business growth can be attained.
Strategic objectives:
 Specific: Organisation is planning to enhance their revenues by 20% after introducing
premium quality clothes for kids.
 Measurable: Company is going to use benchmarking technique to measure their
perform. This will allow company to compare their performance with rival firms.
 Achievable: Objective will be achieved through appropriate market strategies.
 Realistic: Along with revenues, company is planning to increase their market shares by
15%.
 Time bound: Estimated time to achieve this objective is 6 months.
Marketing strategy: Company is going to advertise its products through traditional means like
hoardings, phamplets, radios etc. other than this, company will use social and digital media
platforms like Facebook, Twitter, Instagram to promote their new products (Wynn, 2017).
Financial information: Company is growing their business by introducing kids wear in UK
market. For this, high finances are needed which are not available. Company require 40,000
pounds for this project and have access to 10,000 pound. Remaining amount will be gathered by
taking loan from bank.
Total forecasted budget
Particular 31/12/19 (£) 31/12/20 (£) 31/12/21 (£)
Implementing
technology cost
14000 - -
Promotional expense 10000 7000 6000
Advertisement
expense
5000 6600 4800
Catalogues 4000 6000 3000
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Training charges 5500 6000 7500
Total Cost 38500 25600 23300
Cash flow statement:
Particulars 2019 2020 2021 2022
Cash inflows
Investment 5000
Credit sales 2000 4500 3000 4500
Total inflows 7000 4500 3000 4500
Cash outflows
Fixed: Rent and elexrticity 3000 2500 1500 2000
Variable : Direct material 2500 350 200 3500
Total outflows 5500 2850 1700 5500
Net cash flow 1500 1650 1300 -1000
Opening balance 0 1500 3150 4450
closing balance 1500 3150 4450 3450
Company is going to spend on business activities and operations, in accordance with this
budget. If expenses will be more from this budget, then company will face loss.
TASK 4
P5 Define succession or exit option for small business along with their advantages and
disadvantages
In order to achieve high growth and success, every organisation puts their best efforts.
But in some situations, it is not possible for companies to perform well due to which they are
required to exit or succeed their business. In context of Rowlinson Knitwear, company can also
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face uncertainties under which they have to succeed or exit business. In this context, some of exit
and succession strategies are mentioned below:
Succession options:
Management buy-out: It is a situation in which management of company purchases the
operations and assets of company. This will allow the employees of company to became co-
owners.
 Advantage: It is a simple, quick and easier way to exit from business as minimum
diligence is needed.
 Disadvantage: It is difficult for the employees of company to arrange sufficient capital
to fund a MBO themselves.
Selling business to outside party: Here, business of a company is succeeded to outside
third party and pay pending liabilities and debts from achieved money (Mahmoudi and et. al.,
2013).
 Advantage: Business owner will change and workers will remain unaffected.
 Disadvantage: Intentions of new owner will be unpredicted due to which business and
its productivity can be harmed.
In case of Rowlinson Knitwear, management buyout is best succession strategy. This
strategy will allow the employees to perform their activities in usual manner. Only the
management and manager of company will be different.
Exit options:
Management buy-in: It is a corporate action where an outside management team or
manager can buy a controlling ownership stake in Rowlinson Knitwear and replace their actual
management team.
 Advantage: New manager or management team will posses new and better knowledge,
experience and contacts. By this, Rowlinson Knitwear will be grow properly and high
revenues will be earned.
 Disadvantage: New management team can fail in brining desired growth due to which
employees will feel demotivated to work.
Floating shares: It is referred to the total number of stock which can be traded in an
open market. This is a simple way by which company can exit from their business.
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 Advantage: It will benefits the company in paying their debts and loans in a simple
manner and business owner will became free of legal compliances (Vargo and Seville,
2011).
 Disadvantage: Employees will lose their job and their livelihood will get negatively
impacted.
In context with Rowlinson Knitwear, company can adopt management buy- in as their
exit strategy in which people from outside will perform activities and guide employees so that
company can attain high revenues and profits.
CONCLUSION
From above discussed report, it can be comprehended that without using appropriate
growth strategies and framework such as Ansoff's matrix and Porter's strategies, it is not possible
for a company to attain expected success and growth. There are different internal and external
sources like selling of assets, bank loan,crowd funding to collect required funds. Business plan
benefits in planing the objectives and mission of company. There are different ways such as
liquidation, winding up, selling business to employee so that business owner can properly exit or
succeed from business.
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REFERENCES
Books and Journals
Barnett, J., 2017.Redesigning cities: Principles, practice, implementation. Routledge.
Blackburn, R.A., Hart, M. and Wainwright, T., 2013. Small business performance: business,
strategy and owner-manager characteristics. Journal of small business and enterprise
development. 20(1). pp.8-27.
Colantoni, A. and et. al., 2016. Cities as selective land predators? A lesson on urban growth,
deregulated planning and sprawl containment.Science of the Total Environment. 545.
pp.329-339.
Fahlvik, N., Elfving, B. and Wikström, P., 2014. Evaluation of growth models used in the
Swedish Forest Planning System HeurekaSilva Fennica. 48(2). pp.1-17.
Gatukui, P. K. and Katuse, P., 2014. A review of SMEs strategic planning for growth and
sustainability in Kenya: issues and challenges.
Huang, B. and Zhang, W., 2014. Sustainable land-use planning for a down town lake area in
central China: multi objective optimization approach aided by urban growth modeling.
Journal of Urban Planning and Development.140(2). p.04014002.
Lewis, W.A., 2013. Theory of economic growth. Routledge.
Mahmoudi, P., and et. al., 2013. Space matters: the importance of amenity in planning
metropolitan growth. Australian Journal of Agricultural and Resource Economics.
57(1). pp.38-59.
Mason, P., 2015.Tourism impacts, planning and management. Routledge.Ward, J.,
2016.Keeping the family business healthy: How to plan for continuing growth,
profitability, and family leadership. Springer.
Moseley, M.J., 2013. Growth Centres in Spatial Planning: Pergamon Urban and Regional
Planning. Elsevier.
Vargo, J. and Seville, E., 2011. Crisis strategic planning for SMEs: finding the silver lining.
International Journal of Production Research. 49(18). pp.5619-5635.
Wu, F., 2015.Planning for growth: Urban and regional planning in China. Routledge.
Wynn, M., 2017. Routledge Revivals: Planning and Urban Growth in Southern Europe (1984).
Routledge.
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